Buying in a Recession – Why?

We’re not technically in a recession, but let’s face facts – we’re heading into one.  We’re moving there as a consequence of the Bank of Canada continually raising interest rates to combat inflation.  They’re stopped increasing the Prime Rate now, but warned us that they’re prepared to raise it again if inflation does not fall more sharply. 

We’ve already seen house prices fall across the province, and they may keep falling.

Why Buy In A Recession?

Once into a recession, central governments (in our case the Bank of Canada) decrease interest rates to stimulate the economy and help climb out of recession.  With falling interest rates comes falling mortgage rates, so buyers in that time have lower mortgage costs than during peak periods.

As house prices drop, some sellers take their homes off the market, but many people have to sell e.g. due to job loss or job change, moving out of the province, or other financial reasons.  As there are fewer buyers around during a recession, the remaining buyers can take advantage.

How to Prepare to Buy

Really, 2 things to consider.  First, have your financial affairs in order, which means stable income, a down-payment (family can help here) and a high credit score.  I can advise you in this area.

Second, find a knowledgeable, experienced realtor.  As a mortgage broker for almost 20 years I have direct contact with a raft of realtors all over the GTA.  I’m happy to recommend one that would be a good fit for you.